I’m not sure if we originally developed whole-tailing, but one of our student mentors named it after us. This retail property sale is a combination of the wholesale and retail names and is specifically aimed at conventional end-buyers paying retail prices for their homes.

Basically the only properties that are bought to fit this sales technique are those where the amount of repairs is limited to a week or two of patching and painting, with no major work done. If major work needs to be done, the property is repaired, painted and sold as a “Handyman Special”.

Although I have been doing this type of limited rehab since 1975, I didn’t realize its importance until a student mentor approached me with the proposition, “Is it possible to buy property at 80% – 85% of the listed price? MLS? and resell them at full market value?” He had done it for years by prospecting expired listings because homeowners almost always blamed the realtor for a lack of buyers.

In reality, it was often the real estate agent’s fault because they “sold the listing” by promising a market price that was too high and the owners would not go back on the initial listing price as the listing agent expected them to. And there are many times that an owner would be totally at fault for not lowering an unrealistic price that he wanted. The other complaint from the owners was that the listing agent never brought a buyer to the property and would never hold an “Open House”.

The most successful real estate agents don’t sell homes, they sell listings and let other real estate agents find buyers – that’s the reality of the industry. They also don’t usually do open days because they don’t work very often. Of course, there are the smart real estate agents who use Open House to build their list of buyers, but this is tedious.

We recently put up for sale a student mentor’s first property in an exclusive neighborhood of $300,000 homes. She had bought it wholesale from the homeowner and remodeled it. The weekend we had their sale there was a real estate agent having an open house about 10 houses away. The real estate agent had put up about twenty red and white Open House signs throughout the neighborhood. We put up fourteen posters and waited to see what would happen. As expected, the traffic started within ten minutes and at the end of the first day, the realtor holding the open house came to see our property.

He explained that he had two partners and neither made an offer. We showed him our registration record and had 104 people sign the register and four offers on the property. He said it was impossible, but he kept quiet when he saw the offers, but still he said that he couldn’t believe it. By Sunday, at the close of the sale, 173 people had registered and about 20 did not want to leave their contact information. The real estate agent came again and said that he had 8 people for the whole weekend and that there were no offers.

This real estate agent saw our signage, saw traffic jams coming and going in front of our property, and still didn’t believe it. He even complained that his listing was in better shape, bigger, and offered at a lower price than ours! I gave him the address of our online sales system, but I know he didn’t bother to look at it because I checked later to see if he had bought it.

This was an example of a “full queue” deal for the student and he got over $80,000 for his effort. I have to tell you that the biggest problem was getting the local lenders to believe that there was no fraud involved. A loan underwriter spoke to me and asked, “How much did you have in repairs?” I explained that it didn’t matter because all the lender had to worry about was the borrower and the current value of the property.

Finally he said, “I don’t think a seller would give his house away for such low market value!” I gently explained that motivated sellers don’t care about price, especially when they need to put more money into the property before they can sell it. Even though the borrower/buyer had a letter of commitment with no contingencies from the lender, he turned down the loan.

This process of buying “slightly deteriorated” properties that are no longer listed on the MLS and repairing and painting them works very well. The student I mentioned made five of these deals with me as a partner in a one-year period and is still making many of them in this depleted market. His key to doing so much involves using the proprietary selling system I developed and even when the property sells the first weekend, he sells it again and again. Additional buyers become prospective buyers in the event your previous buyer is unable to obtain financing or changes their mind. Everyone who leaves their contact information gets an alert about the next sale you have and becomes part of your “Preferred Buyers List.” Then you have buyers waiting for your special sales and you have time to work with buyers with credit problems.